Westimmo gets offers from national and international players

State-owned German bankWestLB has received three bids for its real estate lending unit Westdeutsche Immobilienbank, or Westimmo, according to WestLB spokesman Walter Hillebrand-Droste. 'The offers are from national and international investors. The management board will now take a close look at these offers,' he said, declining to provide further details.

According to Dirk Richolt, head of debt advisory services at CBRE in Frankfurt, private equity groups are the most likely bidders for Westimmo, 'because they have the financial means to put together a deal of this kind'.

Private equity firm Lone Star, which has already acquired other distressed German lenders, including Düsseldorfer Hypothekenbank, has been touted as a potential buyer. LoneStar's European head, Bruno Scherrer, told PropertyEU that his company would 'certainly take a look at other potential acquisitions of distressed lenders if the price reflects changes in asset values and if the funding requirements are manageable'.

Lone Star acquired German mortgage lender Düsseldorfer Hypothekenbank in June this year for an undisclosed sum. It also acquired IKB in August 2008. Blackstone, Apollo, Terra Firma and Aareal Bank have also been touted as possible bidders for Westimmo. Chad Pike, a senior managing director and co-head of Blackstone’s real estate group, told Property EU: 'I can confirm we are no longer involved in the Westimmo process.' Terra Firma and Apollo declined to comment. Aareal Bank could not be reached for comment.

However, any bids are likely to be 'significantly lower' than Westimmo's book value - which is believed to be less than EUR600 mln - according to one real estate adviser who asked not to be identified. 'In the current climate, you'd expect a significant discount to book value for lenders that haven’t been ‘cleaned up' yet, likely in the region of 50% or even more,’ he said. WestLB declined to comment.

Westimmo has to be sold by the 31 December this year. The European Commission is forcing WestLB to sell its property bank in return for allowing the German government to bail out WestLB with EUR 3 bn. Westimmo has transferred its EUR 4.2 bn retail-banking unit to Erste Abwicklungsanstalt (EAA), the workout entity established by WestLB in December 2009. The transfer took place in April. Westimmo has also applied for fresh state loan guarantees from Soffin, Germany's bank-stabilization fund, to ensure the bank has sufficient liquidity.

The European Commission is also forcing commercial lender Commerzbank to sell its property lender Eurohypo by 2014 in exchange for allowing the German government to take a 25% stake in Commerzbank.

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